Cargojet Inc. · TSX:CJT
Cargojet — Investor Presentation (February 2020)
31 slides from Cargojet's investor presentation, February 2020
Slide 1: Corporate Overview February 2020
Corporate Overview February 2020
Slide 2: Caution Concerning Forward Looking Statements
Caution Concerning Forward Looking Statements This presentation includes certain forward‐looking statements that are based upon current expectations which involve risks and uncertainties associated with our business and the environment in which the business operates. Any statements contained herein
Slide 3: Agenda
Agenda • Who we Are • Size and Scope • Business Model • Ambition and Strategy • Product Offerings • Customers we Serve • Financial Highlights • Business Outlook 3
Slide 4: Who We Are
Who We Are • Entrepreneurial company that prides itself in building lasting customer relationships while delivering exceptional service • Engaged and passionate workforce of 1,100 with over $486 million in revenues • In less than 20 years, we have become Canada’s #1 cargo airline, only national over
Slide 5: Our Size and Scope - Network
Our Size and Scope ‐ Network Cargojet operates its network across North America transporting Over 1.5 million pounds of time‐sensitive cargo each business night Westbound Flights Eastbound Flights Cargojet operates over 60 flight legs each business night using a combination of B767‐300F; B767‐200F a
Slide 6: Our Size and Scope – Freighter Fleet
Our Size and Scope – Freighter Fleet Payload 2020 2021 Type (lbs) 2015 2016 2017 2018 2019 Plan Plan B767-300 125,000 7 8 9 11 12 13 13 B767-200 100,000 3 1 1 1 2 2 2 B757-200 80,000 5 5 6 8 8 8 8 B727-200 60,000 7 6 3 - - - TOTAL 22 20 19 21 22 23 23 6
Slide 7: Our size and scope - OTP
Our size and scope ‐ OTP 100.0% 99.5% 99.3% 99.0% 98.0% 97.5% 97.3% 97.0% 96.0% 95.0% 94.0% Q1 Q2 Q3 Q4 2016 2017 2018 2019 • Cargojet must demonstrate operational excellence each and every night to maintain industry leading on‐time performance; • Cargojet is ISO 9001‐2008 and IATA Operational Safet
Slide 8: Our Size and Scope - Customers
Our Size and Scope ‐ Customers • Approx. 75% of Domestic Revenues are under long‐ term contracts • All contract include variable surcharges for uncontrollable cost changes (e.g. fuel and regulatory changes) • All contracts have guaranteed volume minimums • All contracts have CPI‐based automatic annu
Slide 9: Our Size and Scope - Alliances
Our Size and Scope ‐ Alliances • Fifty‐Four international Alliances/Partnerships with the world’s leading carriers • Allows these carriers to extend their networks • Expands Cargojet’s brand globally 9
Slide 10: Business Model
Business Model • Only national network that enables next day service for courier industry to over 90% of Canadian population, a strong competitive advantage • Entrepreneurial mindset: allows speed to market, responsiveness and sharp focus on network optimization and cost management • Long‐term custo
Slide 11: Ambition and Strategy - Pillars
Ambition and Strategy ‐ Pillars 1. Build the most efficient “middle‐mile” air capability to allow couriers and logistics players to fulfil their time‐sensitive “next‐day” delivery promise. 2. Identify high growth areas and aggressively pursue opportunities that allow network and fleet optimization t
Slide 12: Ambition and Strategy - Tactics
Ambition and Strategy ‐ Tactics 1. Maintain e‐Commerce leadership (B2B and B2C) – Backbone for all time‐sensitive deliveries across Canada for all major logistics and courier players – Cargojet is the de‐facto enabler of e‐commerce in Canada – Cargojet reaches 90% of Canadian population through its
Slide 13: Ambition and Strategy - Tactics
Ambition and Strategy ‐ Tactics 3. Continue to optimize fleet utilization by building both day and week‐ end networks including Charters and ACMI model 4. Opportunistically utilize west‐to‐east lanes for non‐courier freight opportunities (Asia inbound) and E‐commerce growth 5. Exploit adjacent reven
Slide 14: E-commerce penetration in Canada has plenty of room to grow
E‐commerce penetration in Canada has plenty of room to grow E-commerce as % of retail sales - 2018 China 23.1% UK 19.1% United States 9.7% Germany 7.9% Japan 7.4% Canada 5.0% India 2.2% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 14
Slide 15: Cross Border E-commerce is already strong
Cross Border E‐commerce is already strong – Expected to benefit further as USMCA comes into effect Source: Canada Post report 15
Slide 16: Our Product Offerings
Our Product Offerings We serve four key market segments: • Domestic Network (capacity commitments) • Charters & ACMI dedicated aircraft • International routes to Bermuda, Europe and South America • Interline partnerships/alliances Revenue by Service Type 16
Slide 17: Cargojet Debt at December 31, 2019
Cargojet Debt at December 31, 2019 In millions Hybrid Syndicated Debentures, Revolver, $244 $193 Aircraft and Other Leases, $196 • Total debt excluding the convertible debentures is approx. 4.0 times 12-month Adjusted EBITDAR. 17
Slide 18: Financial Highlights
Financial Highlights 18
Slide 19: Quarterly Revenue and Adjusted EBITDA
Quarterly Revenue and Adjusted EBITDA • Cargojet’s “Peak Season” in Q4 reflects the holiday shopping season beginning in late November. • The growth of e‐commerce is the key driver of Domestic volume and revenue growth 19
Slide 20: Cargojet Has Achieved New Levels of Revenue & Cashflow
Cargojet Has Achieved New Levels of Revenue & Cashflow • Cargojet’s revenues growth is driven by e‐commerce and new ACMI routes flown between Canada, the US and Mexico. • EBITDA in 2014 and 2015 were affected by startup costs related to the new CPGOC contract. Cargojet expensed over $33 million of o
Slide 21: Domestic Revenues
Domestic Revenues • Domestic revenues have increased due to the CPGOC contract and tremendous e‐commerce growth, especially from Amazon. • Surcharge revenues are comprised primarily of fuel surcharges from core customers that are 100% variable based on the price of fuel. Surcharges revenues also inc
Slide 22: ACMI and Charter Revenues
ACMI and Charter Revenues • Cargojet started a new scheduled ACMI route on Sept. 30 2019 that is expected to generate approx. $11 million of annual revenues. Cargojet now operates 6 ACMI routes between Canada, US and Mexico. • ACMI revenues produce a relatively high EBITDA margin since flight costs
Slide 23: Market Cap & Stock Price
Market Cap & Stock Price $120 $1,800 $103.33 $1,600 $100 $1,400 $80 $1,200 $70.79 $1,000 $60 $58.65 $1,609 $800 $45.74 $40 $600 $953 $27.50 $25.91 $785 $400 $20 $487 $14.45 $200 $251 $262 $115 $0 $0 2013 2014 2015 2016 2017 2018 2019 Market-Cap Stock-Price Cargojet was added to the TSX S&P index in
Slide 24: Business Outlook
Business Outlook • Long term customer contracts generate 75% of annual revenues with renewal options • Highly engaged workforce with a strong safety culture continues to be the backbone of our service offerings • We are well positioned to benefit from long‐term secular trends in e‐commerce serving b
Slide 25: Reference Material
Reference Material 25
Slide 26: Air Cargo Industry Memberships
Air Cargo Industry Memberships ISO 9001:2000 Quality Certified Company for the fifth consecutive year. International Air Transport Association The International Air Cargo Association Canadian Courier & Logistics Association 26
Slide 27: Awards
AWARDS 2010 - “Carrier of Choice” – Shipper’s Choice Award 2006 - “Cargo Airline of the Year” – Shipper’s – Cargojet awarded as Canada’s Cargo Airline and Choice Award – Cargojet awarded as Canada’s 2018 - “Carrier of Choice” – Shipper’s Choice Award Carrier of Choice for 2010 by the Canadian Cargo
Slide 28: Boeing 767-300ERF
Boeing 767‐300ERF • Maximum Payload: 125,000 lbs
Slide 29: Boeing 767-200ERF
Boeing 767‐200ERF • Maximum Payload: 100,000 lbs 29
Slide 30: Boeing 757-200ER
Boeing 757‐200ER • Maximum Payload: 80,000 lbs 30
Slide 31: Thank You
—_.W CARGOJ/ET Confidential